Health Fund 2024 Action Items
Gag Clause Attestation
Group health plans, including insured and self-insured plans, are prohibited from entering contracts that contain a gag clause. These provisions prohibit group health plans from entering agreements with a healthcare provider, network or third-party administrator that would directly or indirectly restrict a plan from providing specific cost or quality of care information or data to active or eligible participants, beneficiaries or enrollees in the plan, the plan sponsor, or referring providers.
Plans must attest annually that their contracts do not contain a gag clause. The attestation is submitted electronically to the Center for Medicare and Medicaid Services (CMS). The deadline to submit the gag clause attestation is December 31, 2024.
HIPAA Reproductive Health Care Privacy Rule Amendments
In November 2024, the Department of Health & Human Services (HHS) issued final rules modifying HIPAA privacy rules to support reproductive health care privacy. Generally, the rules strengthen privacy protections by prohibiting the use or disclosure of personal health information (“PHI”) by a covered health care provider, health plan, or health care clearinghouse—or their business associates - to investigate any person for the act of seeking or obtaining reproductive health care, where such health care is lawful under the circumstances in which it is provided.
By December 23, 2024, group health plans must revise their HIPAA privacy policies to incorporate these new protections and disclosure prohibitions. Plans should consider holding informational sessions on these new requirements to keep plan administrators informed of new requirements.
Access to Protected Health Information “PHI”
Proposed changes in the HIPAA regulations would reduce the time within which a plan must provide participants access to PHI from 30 days to 15 days following the request, and require participants be able to inspect their PHI in person and take notes or photographs. The amount of time a plan can request an extension to turn over PHI would also be limited to 15 days. A Final Rule addressing these and other proposals is expected to be published sometime in 2025.
Changes to Employee 401(k) Plans
Employers Should Act Now to Ensure Tracking Methods Are Up-to-Date and Employees Have Necessary Election Forms
Amendments to the Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act 1.0”) will impact employer 401(k) Plan requirements pertaining to “long-term part-time” (LTPT) employees. The SECURE 2.0 Act of 2022 (“Secure Act 2.0”) changed the eligibility period of LTPT employees. Starting January 1, 2025, LTPT employees who work at least 500 hours, but less than 1,000 hours, in two consecutive plan years must be eligible to make salary deferrals to a 401(k) Plan.
Previously, in 2024, employers could not exclude LTPT employees from their 401(k) Plans if they worked at least 500 hours, but less than 1,000 hours, in three consecutive years.
For eligibility in 2024, the testing period began with the plan year beginning on or after January 1, 2021. Part-time employees who worked at least 500 hours in each of the 2021-2023 plan year had to be eligible to make salary deferral contributions to an employer’s 401(k) plan beginning with the 2024 plan year. The law does not require contributions by the employer.
Employers that have not changed their tracking method should revisit the hours worked by LTPT employees in 2023 and 2024 to ensure that all eligible LTPT employees have been provided the necessary forms to elect to make elective salary deferral contributions for the 2025 plan year.
Failure to comply with the new eligibility requirements could result in the employer having to take corrective action and make contributions, plus lost earnings, for eligible employees who were not given the opportunity to participate.
Plan Years Beginning After Dec. 31, 2024: 401(k) (and 403(b)) Plans Must Satisfy New Automatic Enrollment Requirements
New 401(k) (and 403(b)) plans established on or after December 29, 2022, must satisfy automatic enrollment and deduction requirements for plan years beginning after December 31, 2024. A new 401(k) plan must automatically enroll all eligible new hires and existing employees who have not opted out of the plan.
For employees not already enrolled, the employer must deduct at least 3%, but not more than 10%, from the employees’ wages as elective deferrals to its 401(k) plan unless the employee makes an election not to contribute or to contribute a different amount. For each year thereafter, the employer must automatically increase an employee’s elective deferral by 1% until it reaches 10%, but not more than 15%, again unless the employee opts out or elects a different percentage.
These requirements do not apply to 401(k) plans that were established before December 29, 2022, governmental and church plans, businesses with 10 or fewer employees (until they reach 11), and new companies operating for less than three years (until the end of the 3-year period).
Increase in Catch-Up Contributions for Employees 60 to 63
Effective January 1, 2025, participants in 401(k), 403(b)), and government plans who are age 60 – 63 will be able to make “super catch-up contributions.” For 2025 the super catch-up contribution limit is $11,250 instead of the regular $7,500 limit. The amount is indexed at the greater of $10,000 or 150% of the regular catch-up contribution limit, which will be indexed for annual cost-of-living increases starting in 2026.
Eligibility is based on whether you will attain the requisite age during the plan year. So, if you will attain age 50 during 2025, you are eligible for the higher contribution rate starting with the 2025 plan year. On the other hand, if you reach age 64 at the end of the year, you miss the boat and will not have the opportunity to make super catch-up contributions absent a change in the age requirements.
Keep in mind, however, that beginning in 2026, participants with income over $145,000 (as indexed) in the prior calendar year cannot make Roth contributions on a pre-tax basis but must make them to an after-tax Roth contribution account.
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